The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1887-05-26
SUED FOR $4,000, 600.
Foreigners Request Jay Gould and Russell
Sage to Disgorge Large Sum Of Money.
BARBER SHt

NEW YORK, May 25-The Commercial Ad-
vsrtiser says q lawsuit. involving several mill
Ions Of dollars is about to be commenced again st
Jay Gould and Russell Sage. as trustees of the
consolidated mortgage on the Kansas Pacific, by
foreign holders of bonds issued under the mort
gage. Certain facts were ELECTED during the
recent examination into the affairs of the Pacific
roads by the United States Pacific Railway Com
mission which have long been suspected by in
terested parties but which they were unable to
prove Now the very matters they were in the
dark about are made clear to them. and the suit
20 long held in abeyanc will be the result. The
amount involved is about $5,0o0.O00.
The circumstances which the foreign
bopdholders will base their cause of action are
follows: Prior to 1879 the Kansas Pacific road,
besides it's stock and floating debts. was loaded
down with q great variety Of bonds, like the land
grant bonds, first mortgage bonds, inco me bonds
and others, drawing different rates of interest
and covering different sections of the road These
eashng interests were so diverse and compli-
Gated that they threatened disaster to the differ
ent creditors. In order to simplify matters
Consolidated mortgage was agreed upon. with Jay
Gould and Russell Sage as trustees. which would
wipe out all the other classes of securities and
place all creditors an equal footing At the time
this consolidated mortgage was made the Kansas
Pacific road owned 30 600 shares of stock of the
Denver Pacific railroad worth. at par, 800 per
share, but at this time of great market value
These shares were included in the list OF prop
critics covered by the great blanket mortgage.
and were part of the assets that gave the mort
rage value. Earlv in 1879 the plan to consoi-
date the Kansas Pacific and Union Pacific
roads was about to be carried into effect. Gould,
Sage and Sidney Dillon were directors In both
roads At the time. and conversant with all the
facts and circumstances relating to the consoii-
dated mortgage and the proposed consolidation
OF the two roads. One day, about the 1st of
Ia these
gentlemen were in the office of the Kansas Pa
enc railroad, at No. SO Broadway. Mr. Dillon
wrote letter to Messrs Gould and Sage, as
tne trustees of the consolidated mortgage.
asking them to release from the lien of the mort
gage the 10000 shares of Denver Pacific stock,
and handed the modest request to the said trIs-
%es Messrs. Gould and Sage then sat down at
Inc same desk that Dillon had occupied. and on
letter paper, bearing the same heading as Mr..
Dilon's. ipdited a reply declining 10 release the
STOCK. as requested, on their own responsibility,
out utsuggestinc that action be brought against
mem asking for the release of the stock as de-
sred to which they would make no serious de-
tense An attorney was consulted the same
usy, and he promptly drew up ana served com
PLANT on the defendants, Gould and Sage. Or
oinarily, at least twenty days would have
elapsed before answer would be served but
- .nis unique case, an answer was served on the
following day, and application made to judge
Dononue for the appointment OF Ii.
i .huesies as referee, and with
a.o-.snea ne next tive or trree GAYS
.ng when Sidney Dillon testified that the 30 OOO
snsres OF Denver Pacific stock worth but
sSVv zoo or $500 000 though it's face value was
5'VOO,OOO. A report made in accordance
Win TINS testimony. The report was confirmed
s1d Judgment entered, and the SO. .0O0, 900 worth
= STOCK was relieved from the lien of the mort
sage and transferred to Gould, Sage and Dillon
individuals The whole lawsuit, involving
= laree sum of money, was conceived, COM
menced and ended inside of week. On the
,ane day. or the day after the suit was ended
- 20 Ine stock transferred, the consolidation OF
@ s.e Kansas and Union Pacific railroads was con-
h, ,sm mated and shortly after such consolidation
ss - Dcnver Pacific stock became worth its face
siue. had that stock remained under the lien
tne consolidated mortgage, each bond is
"N sa under that mortgage would have been worth
pro rata share of SO. 900. 900 more than it
"ortn to-day. This sum, together with the
L.lued interest would be about 50. 600, 600. 1t
Eoo secure proportionate share of this So GOO,-
- mat the foreign bondholders propose 10
4 ux lug their suit against Gould and Sage. claim
th.a 'Aat tney have been wronefully deprived OF
n,aaIncunt and that court of justice WAS i'm
roSSerly used TO give color of legality TO the
vhoery. Just what number of bondholaers. or
49, Anount. will join IN the present proposed
ssJ ~ 70 not determined. but enough have signi-
mst'er tner intention tn become parties plaintiff to
Ths.N one or the great lawsuits of the day.
soEseai eai amount of bonds issued under the con-
prss, mortgage about $l5. 000. 600. a
ana many OF which were hoated in Frankfort
steIdam, and some London